Selling a Property in Mallorca

The Costs of Selling a Property in Mallorca

by Mark Stücklin

From taxes, estate agent fees, legal fees to energy certificates, here are some of the key costs you have to consider when selling your property in Mallorca.

Capital Gains Tax

When a non-resident sells property in Spain, the buyer is obliged to retain 3% of the price and pay it to the tax authorities to cover the vendor’s Capital Gains Tax (CGT) liabilities.

If the 3% retained exceeds the taxes due, the vendor can expect a refund once all taxes have been paid, though this can take years to get paid. On the other hand, if the vendor’s tax bill is greater than the 3% retention, the Spanish tax authorities may chase the vendor back home, though it is unlikely.

Various terms in English and Spanish are used to name this tax retention. In Spanish, it is known as the ‘Retención (Sobre La Venta de Inmuebles) a cuenta del impuesto de la renta de los no-residentes’. Whilst in English it is referred to as the capital gains tax retention on property sales. Some people also talk about a withholding tax or money withheld, deducted, or kept back on a property sale in Spain. The 3% retention is meant to cover CGT liabilities. The 3% retention does not cover the vendor’s ‘plusvalia’ tax liability, which is paid to the town hall at the time of sale.

After the sale, the buyer has one month from the date of sale to pay the 3% retention to the local tax office using the form (modelo) 211. A copy of the submitted form should then be given to the vendor or his lawyer, so a refund can be claimed.

Capital Gains Tax on Spanish Real Estate

The following only applies to E.E.A. and EU-residents. Residents from outside the European Union pay 24% in general (there are some exceptions).

GGT rates on real estate assets sold in Spain by EEA/EU residents have changed over the years as follows (tax rate at the time of sale): 19% is the current rate, but it’s more complicated than that. EEA/EU vendors who are NOT resident in Spain at the time of sale pay a flat rate of 19% CGT, but EEA/EU vendors who ARE resident in Spain at the time of sale pay a sliding scale starting at 19%:
First 6,000 Euros – 19%
6,000 – 50,000 Euros – 21%
Above 50,000 Euros – 23%
You can check the latest rates at the Tax Agency website here.

Plusvalia

A special reference should be made to the local capital gains tax – known as Plusvalía. This is a local/municipal tax that only applies to the increase in the value of the land upon which urban properties are built, and that is levied at the time of transfer of such properties. It is calculated on the basis of the Valor Catastral (an administrative value that is usually lower than the market value, sometimes considerably) of the property. The amount to be paid will depend on how long the seller has owned the property: the longer the period of time during which the seller has owned the property, the higher the amount of tax. This tax should be paid by the seller, though it is possible for sellers of resale property to try to shift the burden of this tax to the buyer.

Estate Agency Fees

Estate agency fees or commissions are paid by the seller unless otherwise agreed. The standard market commission rate in Mallorca is 5% plus IVA of the selling price. However, this can be discounted if you give the property exclusively to one agency. 

Legal Fees

Appointing a solicitor to represent you through the sale of your property will not normally cost the same as purchasing, so around 0.5% of the sale price.

Spanish Energy Certificate

As of 1st of June 2013, all existing homes for sale or rent in Spain will need an energy certificate. However, as a guide, the following prices are:
Up to 100m2: 200€ + IVA
Between 100m2-200m2: 300€ + IVA
Between 200m2-300m2: 400€ + IVA
Over 300m2: 500€ + IVA

Morgan and Morgan have vast experience in selling properties in Mallorca. For any guidance and recommendation please do not hesitate in contacting us.

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